Fund manager banks on new wealth of China's consumers Marketwatch
SAN FRANCISCO (MarketWatch) -- Hong Kong-based portfolio manager Pauline Dan is looking to capitalize on China's persistent domestic demand, even as the government may find it necessary to keep the country's strong economic growth in check.
The manager of the John Hancock Greater China Opportunities Fund (JCOAX) looks to valuation measures such as cash flow, dividend yield and management quality to help uncover the investments that will most benefit from what she sees as economic growth of 7% to 8% for China.
The country fund, introduced in June 2005, rose 55% in the 12 months through Jan. 11, according to fund tracker Lipper Inc. That topped its peers' 48.6% average gain.
Oil giant PetroChina Co. Ltd. (PTR) and telecommunications leader China Mobile Ltd. (CHL), both with U.S. listed shares, are the fund's two biggest holdings, comprising almost 20% of total assets.
But of her current favorites, Bank of East Asia Ltd. (BKEAY), Hong Kong's third-largest bank, tops the list. Overall, banks located in the region make up more than 25% of the fund's holdings.
"There's lots of room for growth in the financial industry," Dan said in an e-mail interview, adding that this particular bank is garnering more and more exposure across China. The U.S.-traded shares have almost doubled in the past year, closing at $5.90 on Friday.
She also likes Denway Motors Ltd. , a Chinese joint-venture partner of Japan's Honda Motor Co. (HMC).
Business should see a spike along with the "rising affluence from China's middle class," Dan said. The company assembles and sells cars and their components as well as audio equipment.
Road King Infrastructure Ltd. , which operates toll roads and bridges primarily on China's eastern coast, is another of Dan's top recommendations. Along with its toll road portfolio and real estate developments, Road King also sells ginseng to North America markets.
"The company is taking advantage of local connections to expand into property development," she said.
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